1991 (12) TMI 88 - AT - Income Tax

Summary

Issues: Interpretation of section 11(5) of the IT Act, 1961 regarding exemption for a public charitable trust.

In this judgment, the Appellate Tribunal ITAT BOMBAY-C addressed an appeal by the revenue against the order of the CIT(Appeals)-XIII, Bombay concerning the assessment year 1984-85. The respondent did not appear, leading to an ex parte hearing. The revenue argued that the assessee violated section 11(5) of the IT Act, thus disqualifying them from exemption under section 11. The Income Tax Officer (ITO) disallowed the claim due to the amount credited to the corpus fund remaining with another trust, which was deemed an impermissible investment under section 11(5). The Tribunal examined the facts, noting that the assessee trust and another trust followed the same accounting system. The donation shown as payable in one trust's books was reflected as received in the assessee's books, leading to a misinterpretation by the ITO. The Tribunal analyzed the concept of "investment" and concluded that the amount in question, received as residual income from a trust, did not constitute an investment under section 11(5). The Tribunal cited precedents and dictionaries to define investment as the laying out of money for profit, emphasizing that the sum received by the assessee was not an investment but a donation. Therefore, the Tribunal held that the assessee was entitled to the benefits under section 11, overturning the ITO's decision and upholding the CIT(Appeals) order, ultimately dismissing the revenue's appeal.